First of all, we need to understand that the DAO will create value by participating in the CNFT market and by delivering some services like escrow, some derivatives financial products like an index on the portfolio of CNFT, getting involved in the CNFT project as an early adopter, earning royalties from secondary markets, and some other things that are still to be discovered. So if the DAO does well, not only will the value of the assets under its administration increase significantly but also the token that represents a claim on those assets.
To build the DAO treasury we will mint 10,000 CNFT. 75% of the minting income will go to the DAO Treasury and 25% to the Dev Team. Given the fact that Rats DAO is the first DAO on the Cardano Blockchain that purchases and functionalizes blue-chip CNFTs we chose a “baby step” approach to find out if there was a market fit for this kind of project. That is why there is a strong emphasis on the Genesis Token. It allows the DAO holders to buy the first CNFT and as a consequence spread awareness of the CNFT ecosystem.
We have developed two types of tokens: A Non-fungible and a Fungible. The main goal is to fund the Treasury by minting CNFT and then distribute $RAT tokens through an airdrop to CNFT holders and through staking CNFT. Holding one CNFT provides the right to vote and the amount of $RAT the weight of the vote.
- There will be 1,000 Genesis tokens
- There will be 9,000 Member tokens
There will be 100,000,000 $RAT
$RAT will be distributed as follows:
- 5% Airdrop to Genesis token holders (up to 5,000 per CNFT)
- 5% Airdrop to Member token holders (up to 555 per CNFT)
- 5% Airdrop to Dev team
- 20% DAO Treasury
- 45% Staking Rewards
- 10% Grants to the community
- 10% SC Development & Implementation
Assuming, for simplicity, that 100% of the tokens are staked and the reward program lasts 2 years, the resulting voting power would end up 17.27% in the hands of Genesis holders and 82.73% in the hands of Member holders as you can see in the chart below:
Of course, this is just a reference. It does not take into account other sources of $RAT, like grants, and purchases in secondary markets.
The market Cap of $RAT should be equivalent to the value of the DAO’s Assets plus an expectation of future growth. One unit of $RAT’s value is determined by its market cap by 100,000,000. In a mostly conservative estimate by the end of 2022, the value of a $RAT would be 0.03 ADA. The next chart shows you how we arrived at this number:
Again, all of this is just a scenario to explain the basic tokenomics in play.
A few conclusions from this scenario
- Genesis token holders are airdropped for an amount that exceeds their original investment (having minting).
- The DAO Asset Value should guide the floor of the tokens in secondary markets, something similar to Olympus DAO.
- CNFT value is not only determined by the willingness of being a member of the DAO but also by the remaining claim on $RAT
- Providing this incentive we believed that the price in secondary markets of the CNFT will increase. This will benefit those that hold the asset for the long run and those that want to make a profit in the short term.
- As $RAT is being distributed some of the CNFT value is reduced as claims on future $RAT is reduced.
The method by which the airdrop & staking rewards are organized provides a somehow smooth transition to a full decentralized organization. At first, the actual core team is in charge of almost everything, once the minting is over we will implement a smart contract to vote and in some cases enforce the decision made. But even in this level of decentralization, there are nuances. At first, a disproportionate amount of voting power will be in hands of the Genesis Holders that would hold 50% of the $RAT due to the airdrop just received, in time this proportion will reduce, reaching 17% at the end of the rewarding program. We believe this makes sense.
- Phase 0-Creation: The actual core team is in charge of almost everything, from writing the whitepaper, minting Genesys token, Tokenomics, Organizing the community, social media coverage, etc. We expect this phase to last 6 weeks until end of February 2022.
- Phase 1-Governance: once the minting is over we will implement a smart contracts to vote and in some cases enforce the decision made (tools being considered are Snapchat, Aragon, etc.) and the distribution of RATs. We expect this phase to last until June 2022.
- Phase 2-Growth: we forsee a significant potential of growth in the DAO were we would need more talent for growth and marketing, CNFTs curators, spreading $RAT to relevant exchanges, building content, tranlation services, etc. We exect to enter this phase on H2 2022.